Page 30 - Noble Magazine • July-August 2020-1

EDUCATION

Money Laundering

Continued from Page 28 broad. The relevance for educational people, approximately 52% of the
institutions would be entities based working population, are employed by
of AML/CFT policies, an educational offshore especially in tax havens and Government in Botswana (25% by
institution should review and where parents who operate businesses that the central government, 22% by local
necessary interconnect its anti- are known to be high risk for money government and 5% by parastatals).
bribery and corruption policies laundering or predominantly deal Before an educational institution enters
and procedures. Overlapping both in cash. An educational institution a business arrangement with a PIP,
frameworks significantly strengthens when dealing with a company or approval must be obtained from a senior
the capability of an organisation to trust, particularly offshore, which manager and reasonable measures
prevent financial crime. As we know usually means receiving funds from undertaken to establish both the source
from global experience, where an it in payment for fees, must identify of the persons wealth and source of their
AML/CFT framework or any internal the natural person behind the legal funds. The PIP must then be subject to
control measure has failed, like the entity. Failure to do so could mean enhanced ongoing monitoring during
US college scandal, it has primarily that the institution could be dealing the relationship.
been due to corrupt staff; with a sanctioned entity, a person
of high risk or a foreign prominent Finally, private universities and schools
• Conduct due diligence on entities influential person (PIP). must adhere to the mandatory record
before they become customers and keeping and reporting obligations
continue with ongoing due diligence Private education required by the FIA. Records must be
throughout the life of the business kept for a period of 20 years and an
relationship. The question often raised providers are advised institution is required to report to the FIA
by educational institutions is who is to not take the risk suspicious activity it has identified and
the customer? For universities and of being caught in all cash transactions of or above P10,000
schools that would mean the parents or in equivalent foreign currency.
or guardians of children. Unless the money laundering
university is only dealing with a student and implement Failure by a private educational
of adult age and has not entered a measures to institution to comply with any of the
business relationship with another provisions of the FI Act could result in
adult, being a parent or guardian of eliminate or mitigate the imposition of a serious penalty upon
the student. But what about children the probability of it the organisation. Serious penalties also
attending primary and secondary apply under the FI Act for any person who
schools run by private organisations? occurring. is responsible for ensuring compliance
The FI Act requires specified parties with the FI Act who negligently fails
and accountable institutions to The definition of a PIP in the FIA is to take any measure that is reasonably
identify and verify the identity of any extensive and includes any person who necessary to ensure compliance. And
beneficial owner. And under the law, is entrusted with a public function in if any manager or employee is involved
a beneficial owner includes a natural Botswana or by a foreign country and in an act of money laundering, and
person, who directly or indirectly includes close associates and immediate note that in Botswana the level of
through any contract, arrangement, family members. To be a politically knowledge required to convict a person
understanding, relationship or is exposed person under international is low compared to other crimes, then
otherwise is involved in a transaction AML/CFT standards requires that a penalties involving a fine not exceeding
conducted on his or her behalf. This person hold a “significant” position P20,000,000 or imprisonment for a
would appear to include children. in government or in an international term not exceeding 20 years, or both
Universities and private schools are organisation, but that is not the case could be imposed on that person.
therefore required to implement CDD in Botswana. The word significant is
measures for parents and for children missing from the definition. This means Private education providers are advised
attending or who apply to attend the any person employed by the government to not take the risk of being caught
institution; and in Botswana is a PIP regardless of in money laundering and implement
the position they hold. It should be measures to eliminate or mitigate the
• Conducting enhanced due noted that it not only includes senior probability of it occurring.
diligence in relation to customers, executive officers of public bodies and
products, services, and jurisdictions political parties but also from a private Article written by Merero Partners,
deemed high risk because of the entity. It is therefore highly probable a boutique advisory firm based in
risk assessment or from advice that a private university or school will Botswana offering Corporate Finance,
received from the Financial engage a customer, a parent, or a child, Management Consulting and Risk
Intelligence Agency or other foreign who is a PIP. This is because a PIP is Advisory Services. Contact us via email
organisation. The list of what is a usually able to afford the fees charged enquiries@merero.co.bw for more
high-risk business, or a high-risk by private educational institutions information on our AML/CFT training
jurisdiction as defined in the FIA is and because a very large number of and consultancy services in Botswana.

30 Noble Magazine // July - August 2020